Supercenter juggernaut to roll up $50 billion in sales worldwide by 2000 - Wal-Mart

Discount Store News, Dec 5, 1994 by Laura Liebeck

Wal-Mart will cap fiscal 1994 with a super grand opening day of 22 new supercenters on Jan. 25, 1995. It will be the single biggest store opening day in the history of the 6-year-old Wal-Mart Supercenter division, currently led by 21-year Wal-Mart veteran Nick White.

White, who serves as executive vice president of supercenters, has served the Bentonville, Ark., retailer as a store manager, a district manager, assistant to the executive vice president, regional vice president, vice president/divisional merchandise manager for Sam's Club, and executive vice president/general manager. He will preside over 140 Wal-Mart Supercenters by the end of fiscal 1994.

Among the upcoming openings in January are Rome (outside Syracuse), N.Y., Dearfield, Pa., and Culpepper, Va., in suburban Washington, D.C. At 200,000 sq. ft., the Rome and Culpepper units will be the largest of Wal-Mart's current U.S. supercenters (one in Mexico City is 250,000 sq. ft.).

Wal-Mart will introduce two new supercenter prototypes in 1995, one larger, probably between 235,000 sq. ft. and 240,000 sq. ft., and another smaller than its current smallest 116,000-sq.-ft. supercenter. The new small supercenter will be about 110,000 sq. ft. With these two prototypes, Wal-Mart is looking to stake its claim on both large metro markets and tiny, rural outposts.

At 240,000 sq. ft., Wal-Mart revisits a store size it used for its less successful Hypermart USA format. Wal-Mart will be offering these large supercenters to urban communities where time-pressed shoppers would be more tolerant of the unit's size and more willing to navigate their way between food and general merchandise departments.

The success of this upcoming larger supercenter will ultimately rest with the use of logical adjacencies that make the store's shop smaller than their actual size.

The smaller 110,000-sq.-ft. prototype, a slimmed down version of Wal-Mart's 116,000-sq.-ft. unit, is considered a better fit for the small markets than the 116,000-sq.-ft. and better suited to the company's return-on-investment goals. For example, Wal-Mart recently opened a 116,000-sq.-ft. supercenter in West Branson, Mo., a town of only 81 people. The unit employs 411 associates from the greater Branson community, now the new country music mecca of the United States.

One Wal-Mart insider said that while West Branson will largely draw on the tourist population it, like one unit in Riply, Tenn., would have been a perfect site for the new 110,000-sq.-ft. superstore. In the case of Ripley, Tenn., the 110,000-sq.-ft. supercenter would have been bigger and better than the small, old Wal-Mart it replaced. It also would have offered the community a full-featured supermarket program in a contemporary setting, probably more than the area's population ever expected. Also, the unit would accomplish all of this in a smaller box with lower operating expenses.

The challenge, said the Wal-Mart insider, would be to "get an assortment that holds people. It's a tighter store, but it can be done." For example, in cosmetics, rather than a bullpen layout, two side counters could meet customer needs, the source said. In produce, more basic assortments of fresh fruits and vegetables would suffice.

While few details about the 110,000-sq.-ft. prototype are available, the smaller unit is expected to have a single entrance, rather than two entrances like other supercenters, and will feature fewer facings of merchandise, smaller stockroom space and a completely redesigned (and smaller) checkout area. Product mix will be nearly identical to the larger stores. No department will be eliminated, but many, if not all, will be scaled back.

Obviously, sales at the smaller prototype could fall to nearly half that of conventional supercenters, which typically produce $1 million to $1.5 million per week. While $500,000 in weekly sales from the 110,000-sq.-ft. supercenters is expected, $600,000 to $750,000 is considered achievable. Sales at the upcoming larger prototype would probably be targeted at $2 million or more per week because of the drawing power of the larger unit in densely populated areas. Details about its design are also unavailable, but the super-sized supercenter is expected to better utilize the front "mall" space of the store and even carry broader assortments.

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With these two new prototypes and the introduction of shop-at-home service in the test market of Springfield, Mo., Wal-Mart's supercenter division is expected to become larger than any traditional supermarket chain in the nation by the year 2000.

Wal-Mart will pass Meijer this year to become the largest supercenter operator in the nation, with 140 supercenters and $5.9 billion in sales.

Next year, another 100 supercenters will be added to the roster, with at least that many opening in each of the next several years. A third food distribution center is expected to open in '95 to handle this growth and other new distribution facilities are likely to follow.

A 100-store-per-year opening pace is probably a conservative figure, since Wal-Mart could easily accelerate openings by converting and/or relocating more older Wal-Mart's to supercenters. For example, 300 to 400 Wal-Mart stores are located in the supply area of the Temple, Texas, distribution center. Most of these stores could be converted into supercenters.